Buy BP (NYSE:BP) Put Options, Sell Transoceans's (NYSE:RIG), says Barclays

Barclays said that investors could take advantage of the gulf oil spill by buying put options of BP (NYSE:BP) and selling those of Transoceans (NYSE:RIG).

Puts give investors the right to sell a stock, and the idea is to sell the January $45 put options of Transocean and buy the $40 put options connected to American depositary receipts of BP.

“The options market seems to be pricing in a higher downside risk,” for Transocean because the premium for its puts is high compared with calls while BP’s put premium is “cheap,” said options strategist Maneesh Deshpande. “We recommend this trade to investors looking to express a bearish view on the impact of the accident.”

Transocean has lost about 28 percent of share value since the accident, and BP has lost close to 23 percent of its value.